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Buffett Says Investor Returns ‘Terrific’ as U.S. Workers Suffer

Nov. 15 (Bloomberg) -- Warren Buffett, who invested $23.9
billion in the third quarter at his Berkshire Hathaway Inc.,
said shareholders of U.S. companies are enjoying prosperity that
eludes workers struggling with high unemployment rates and lower
home values.

“The return on equity, on tangible equity, for American
business today is terrific, overall,” Buffett said in an
interview posted today on the website of Berkshire’s Business
Wire unit. “Housing is still in the depression of the fall of
2008. It has not come back at all.”

Buffett, 81, is adding to his stock portfolio, repurchasing
shares of Omaha, Nebraska-based Berkshire and investing in a
collection of subsidiaries that span power production and
insurance to consumer goods and luxury travel. The chief
executive officer said the U.S. housing market will be healthy
“in a few years” without forecasting exactly when the slump
will end.

Real estate has defied prior predictions of rebound from
Buffett, who said in February 2010 that “within a year or so,
residential housing problems should largely be behind us.” The
median price of a single-family home decreased in the third
quarter from a year earlier in 111 metropolitan areas out of the
150 measured, the National Association of Realtors said in a
report this month.

Housing “doesn’t hurt corporate profits that much in most
areas,” Buffett said. “But the American worker is not doing
well.”

Trains, Candy

The property-market slump has hurt Berkshire’s brick and
carpeting businesses, while results improved at units including
the Burlington Northern Santa Fe railroad, See’s Candies and
Business Wire, which distributes press releases. The interview
was conducted Sept. 30 with Business Wire CEO Cathy Baron Tamraz
to commemorate the unit’s 50th anniversary.

Buffett has drawn down Berkshire’s cash this year to fund
investments including the takeover of engine-additives maker
Lubrizol Corp. and the purchase of more than $10 billion of
stock in International Business Machines Corp. Berkshire’s
third-quarter profit declined 24 percent to $2.28 billion as
Buffett’s equity derivative bets produced a loss.

“We have been coming back,” Buffett said of the U.S.
economy. “Employment has lagged.”

Gross domestic product, the value of all goods and services
produced, rose at a 2.5 percent annual rate in the third
quarter, up from 1.3 percent in the prior three months, Commerce
Department figures showed last month. The jobless rate has been
stuck around 9 percent or higher for more than two years. Hourly
wages adjusted for inflation were down 1.8 percent in the 12
months ended in September.

‘My Class Has Won’

Buffett, the world’s third-richest person, reiterated his
call for increased taxes on the wealthy.

“Through the tax code, there has been class warfare waged,
and my class has won,” Buffett said. “It’s been a rout. You
have seen a period where American workers generally have gone no
place, and where the really super rich as a group increased
their incomes five for one in this rarefied atmosphere.”

Berkshire owns a residential real estate broker in addition
to units that produce building materials such as Acme bricks,
Benjamin Moore paint and Shaw carpets. The housing market and
residential construction won’t recover until household creation
outstrips the supply of homes, Buffett said.

“We had the greatest binge in housing that this country or
probably any country has seen,” Buffett said. “When you have a
huge bubble in the biggest asset that most people have and that
bubble pops, and people have borrowed against that asset and
everything, you’re not going to get over it in a day or a year
or a month.”